Realogy stock fell 16 percent.
Zillow dropped 5.5 percent.
RE/MAX shed just over 5 percent.
And that was just on Thursday.
Across the board, jitters over the still-spreading coronavirus have slammed financial markets this week and led to some brutal records. Among them, the Dow dropped nearly 1,200 points Thursday, which was its largest-ever single day point decline. The S&P 500 was down 4.4 percent, making Thursday its worst day since 2011 — when the economy was still feeling the effects of the Great Recession. And the Nasdaq Composite was down 4.61 percent Thursday.
Those results also come during the latter half of a brutal week for investors that saw repeated stock sell offs, and which, according to analysts, have now pushed markets into correction territory.
A traders on the floor of the New York Stock Exchange Thursday. Credit: Scott Heins and Getty Images
At the root of all the chaos is the coronavirus, which has been gradually spreading across the globe since it was first identified late last year in Wuhan, China. The virus has so far been detected in more than 40 countries. Officials across the world have identified more than 80,000 cases, and linked the disease — which can have either severe or mild symptoms — to over 2,700 deaths.
Though Asian countries have so far been among the most severely impacted, U.S. officials said Tuesday that Americans could ultimately see ““significant disruption” and “that this might be bad.” Those warnings have coincided with some real estate agents canceling events and modifying contracts, as well as growing anxiety in the housing market.
And the ongoing havoc among real estate stocks is unlikely to assuage any fears.
Realogy offers a useful case study. After a period of well-publicized struggles in the market, the company’s stock price had mostly been rising since September of last year. Heading into an earnings report on Tuesday, shares reached $13.82 — their highest price since May 2019. However, shares fell over the course of the day as the markets generally declined, and then again Wednesday after mixed earnings results. And finally they fell again Thursday with the rest of the market.
But the price has been plummeting since then, along with the rest of the market. Shares closed at $9.70 Thursday, and had continued to slide further in after-hours trading.
A chart showing Realogy’s stock price over the last year. Credit: Google
Or take Zillow. Last week a strong earnings report set the portal-cum-iBuyer’s stock soaring from less than $55 to more than $65 per share. The runaway price was even enough to turn company founder and CEO Rich Barton into a billionaire.
But by Thursday, Zillow’s stock had tumbled back down to just over $54 per share — lower than the price it was trading at before the latest earnings report. However, in Zillow’s case the stock is still up compared to one year ago when shares were fetching over $41.
Zillow’s stock price over the last year. Credit: Google
Realogy and Zillow are just two examples — chosen for their massive size and influence — but numerous publicly traded real estate companies have seen significant stock declines this week.
RE/MAX, for instance, was trading at just under $34 per share last Friday. By the time the markets closed Thursday, however, it was down to less than $29.50.
Redfin ended last week with shares trading at $32.45. But by the end of Thursday, the price had fallen to $27.69.
And shares of eXp World Holdings, the parent of eXp Realty, were trading at $11.47 on Friday but had fallen to $10 per share at the end of the day Thursday.
Of course, the carnage was not limited to real estate. Amazon, for one, saw its share price drop by 4.81 percent Thursday. Apple fell by 6.54 percent. And Microsoft dropped by 7.05 percent.
Though any global crisis can potentially send markets crashing, the coronavirus that has prompted all this chaos has been particularly worrisome for some analysts. Among them, Tom Hainlin — an investment strategist at Ascent Private Capital Management — told CNBC this week that his firm is “extremely cautious” and that when it comes to the virus “we haven’t seen anything like this really in our investing lifetimes.”
David Kostin, the chief equity strategist for Goldman Sachs, said on Bloomberg TV that he now expects U.S. corporations to have no earnings growth this year.
Helane Becker, of financial services firm Cowen, observed that the losses just keep coming when she wrote in a note that “every day we think we could be near a bottom, and every day we are not,” The Washington Post reported.
Finally, London-based financial analytics company Capital Economics also downgraded its GDP forecast for the U.K. in response to the virus. And while that downgrade was only for one country, the logic behind it is ominous for everyone.
“The failure of the Chinese economy to recover promptly from the measures put in place to contain the coronavirus means that world demand growth will be softer than we had anticipated this year,” the firm wrote Thursday in a note.
Traders on the floor of the New York Stock Exchange Wednesday. Credit: Scott Heins and Getty Images
A handful of real estate companies didn’t immediately respond to Inman’s inquiries Thursday about what their stock losses might mean.
But despite all the chaos, panic mode hasn’t set in just yet. That’s because while the day-to-day financial situation may be bleak, the overall health of the real estate market remains relatively strong.
Danielle Hale
“The U.S. economy is doing quite well,” realtor.com Economist Danielle Hale told Inman. “The labor market is quite healthy.”
Hale’s point was that the overall fundamentals of the economy — and particularly the housing market — are in good shape, even if the coronavirus is causing some disruption at the moment. Most significantly, she said that there are still plenty of people who want to buy homes, and that supply remains extremely low.
“Demand is very healthy,” she continued. “I think that bodes well for the housing market.”
Hale did say that the virus could cause some turmoil if, for example, construction workers got sick en masse and couldn’t continue building homes. Or, there could be problems the illness spread to the point that the kinds of face-to-face interactions real estate requires decreased.
Overall, however, Hale was generally optimistic about the housing and real estate industries. And if that’s the case, the logical conclusion is that the real estate companies currently suffering stock declines will recover.
Other analysts also avoided a nihilistic outlook. Kostin, the Goldman Sachs analyst, said that while corporations may not have earnings growth this year, he still expects the overall U.S. economy to grow. And, he expects an earnings rebound next year.
Mark Hamrick, a senior economic analyst for financial services firm Bankrate.com, also told Inman that he doesn’t anticipate long-term economic impacts from the coronavirus, and he advised people to keep some perspective.
“One of the most important takeaways from this experience as we now know it,” he said, “is that it will be resolved at some point.”
